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Comments

    • If it is a payment by credit transfer then yes – we credit cash.

      It is a receipt by credit transfer then we debit cash.

      (The word credit in credit transfer is nothing to do with debits or credits – it is just another word for a bank transfer)

  3. Sir, I just had a general question from this lecture.
    What is a Journal entry for payment of electricity bill through credit card?
    Do you open a new account for credit card or Credit bank account?

    • Assuming that the credit card is one that sends a monthly statement to pay, then you would credit an account for the credit card.
      (Some credit cards take the money directly from your bank account, in which case you would credit cash).

      However, as I do say in the lectures, credit card transactions are not examined in Paper F3. The reason is that we are looking at businesses, and although some businesses do use credit cards, in most cases they are used by individuals (who might then claim from the business).

  5. Sir, i have a doubt. The Foll. is a T- account- capital a/c. What should i understand when income statement is 400 and how do I know when to write this?

    Capital a/c
    Drawings 100 Cash 5000
    Income Statement 400
    Balance 5300

    • In future please ask questions in the Ask the Tutor Forum – not as a comment on a lecture about something completely different 馃檪

      In the exam you can not be asked to prepare t-accounts – sometimes they are useful in your own workings, but that is really all.
      The amount owed to the owner (the capital) increases due to any profit (from the income statement) and decreases due to any drawings. That is all that is happening here.
      You should watch the lecture on chapters 2 and 3 of the Lecture Notes where this is all explained.

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